Contract Management – making the business case for investment

We announced last week the publication of a new briefing paper from Spend Matters, written in conjunction with BravoSolution and titled, “Contract Management - making the business case for investment”.  It’s aimed at helping managers put together a compelling business case for investment in contract management, whether that investment is represented by additional or better resource, training, tools or other solutions.

This is the first of three linked papers covering the topic, with the next two coming shortly.  We’re going to feature a couple of excerpts here to whet your appetite – but do download the paper here, free on registration.

In this extract, we cover the reasons we suggest procurement has to take ownership of contract management and take the lead on developing the business case.

Why procurement should own contract management

 

If we're not prepared to take on the ownership of contract management across our organisations, who else do we think has the desire and skills to do that?

The heart of the business case will explain just why contract management is so important for organisations. But the business case may also need to include an explanation of the logic for  procurement taking the lead. Here are three strong logical arguments that can be used.

  • No-one else will do it! Whilst individual business areas, functions or even people may be very interested in managing their "own" contracts, it is hard to see that they would have the appetite to take on overall process ownership, in terms of driving good practice across the organisation. Common systems, training, governance, reporting need to be co-ordinated - procurement has a clear over-arching interest so offer one logical solution.
  • Contract management is logically part of the end to end procurement process. It flows naturally from the procurement and contracting process, and should build on the supplier selection, negotiation and contracting process steps that are central to procurement.
  • Whilst contract users have an obvious incentive for contract management to be successful, procurement has a wider motivation. When a contract goes wrong, it is unusual to hear people say "that was a good contract but we managed it badly". It is more common to hear "why did procurement choose that supplier" or "it's a really bad contract". So procurement people have a personal and vested interest in effective contract management!

However, we would stress that users and budget holders also have key roles to play - procurement ownership is about oversight, strategy, tools and processes, governance, and skills, not executing every aspect of contract management”.

There’s lots more of course in the paper, and we’ll have another extract shortly.

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